9 March 2011 Last updated at 03:17 ET

China to invest $200bn in low-cost homes to curb prices

China's economic success has seen a huge spike in demand for property pushing up prices.

China will build 10 million low-cost homes this year at a cost of $200bn (£124bn), a government minister has said.

The move comes as soaring home prices spur complaints about affordability.

In January, prices of new homes rose in 68 of the 70 cities monitored by the government compared to a year earlier.

The spending is a part of a commitment to construct 36 million low-cost homes over the next five years.

Analysis

Chris Hogg BBC News, Shanghai

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It's getting harder and harder for families in Chinese cities to buy even a small apartment. The government's responded with measures to try to curb speculation, making it more expensive to buy second homes and telling local governments to set price targets.

Qi Ji, a housing minister, said these price curbs were an attempt to direct the limited supply of housing towards those who needed it most.

Property developers are already complaining that the plans to build so many affordable homes will hit their profits. Ten million units would be more than half the number of new homes built here last year

'Postpone purchases'

The huge spike in property prices has also raised concerns about a property bubble being formed.

Authorities are worried that if not controlled, speculators could drive prices even higher.

"One of the key points we are trying to control, is to postpone purchases by those consumers who don't need to settle down and buy houses urgently," Deputy Housing Minister Qi Ji said.

The regulators have already introduced measures to that effect. They include raising down payment requirements and curbing lending on purchase of second homes.

Cities like Shanghai and Chongqing have imposed a property tax to reduce profits for sellers.